January 19, 2017
- Equilibrium - the point in which the supply curve intersects with the demand curve
- Thinking at the margins - deciding whether to add or subtract one additional unit of some resource
- Production Possibilities Graph (PPG) - graph that shows alternative ways to use an economy’s resources
- Four Key Assumptions (PPG)
- Only two goods can be produced
- Full employment of resources
- Fixed resources (factors of production)
- Fixed technology
- Efficiency - using resources in such a way to maximize the production of goods and services; increases profits
- Under-utilization - opposite of efficiency; using fewer resources than an economy is capable of using, leads to a decrease in profits
- Price ceiling - when the government puts a legal limit on how high the price of a product can be; creates a shortage
- Excess supply - occurs when quantity supply is greater than quantity demanded; will result in a surplus
- Surplus - producers have inventories that they cannot get rid of
- Price floor - lowest legal price a commodity can be sold at; creates surpluses
I like how your posts are very informative, but I would try formatting them as more like a blog than just notes. More diagrams and visuals would also make the posts more appealing!
ReplyDeleteI have to agree. Your notes are fantastic, but need a little more visual representations. For instance, you can demonstrate where the equilibrium point, price ceiling, and price floor are on a graph. Keep up the great work!
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